ABN AMRO registers €400m loss in H1 2020

Maria Nikolova

The loss was mainly attributable to impairments of €1,814 million.

ABN AMRO today posted its financial report for the first half of 2020, with the company recording a loss of EUR 400 million for the first six months of 2020.

The result was mainly attributable to significant impairments in the first half of 2020 amounting to EUR 1,814 million. The increase in impairment charges reflects the financial impact of Covid-19, oil price developments and three exceptional client files in the credit portfolio relating to a loss at Clearing and two potential fraud cases, one in Singapore (TCF) and one in Germany. In total, an amount of EUR 827 million related to Covid-19 and oil price developments in H1 2020. The incidental losses related to a large loss in ABN AMRO’s Clearing operations and two potential fraud cases amounted to a total impairment of EUR 616 million.

Let’s recall that, as a result of unprecedented volumes and volatility in the financial markets following Covid-19, ABN AMRO Clearing recorded a large loss for one of its US clients. This client had a specific strategy, trading volatility as a pure asset class using US options and futures on the VIX and S&P index. Following extreme stress and dislocations in US markets, it incurred significant losses over a short timeframe and failed to meet the minimum risk and margin requirements. To prevent further losses, ABN AMRO Clearing decided to close-out the positions of this client.

Operating income for the first half of 2020 amounted to EUR 3,909 million, a decrease of EUR 494 million compared with the equivalent period in 2019. Excluding the impact of the incidentals and volatile items in both half years, the decrease in operating income was predominantly the result of lower net interest income.

Net interest income was EUR 3,041 million, compared with EUR 3,254 million in H1 2019. Excluding incidentals and divestments, net interest income declined mainly as a result of continued pressure on deposit margins and, to a lesser extent, from slightly lower loan margins and average volumes. The decline was partly compensated by charging negative rates to clients with deposits above EUR 2.5 million and ECB deposit tiering.

Net fee and commission income amounted to EUR 813 million, a decrease of EUR 14 million compared with the first half of 2019. Excluding divestments (mainly Stater), net fee and commission income increased by EUR 23 million, predominantly at Clearing (CIB), due to higher market volatility in H1 2020. This was partly offset by lower income at ICS (Retail Banking) due to lower credit card usage as a result of Covid-19.

Other operating income decreased to EUR 55 million in the first half of 2020. Let’s note that the result for the first half of 2019 included a EUR 130 million book gain for the sale of Stater, while the result for the first half of 2020 included EUR 158 million lower income from volatile items.

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